What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-04 · 138 added, 267 removed, 423 unchanged (49% of the section changed)

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(In Thousands, Except Per Share Amounts)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets:

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Right-of-use assets - Operating leases, net 38,013 39,263

Right-of-use assets - Finance leases, net — 17

Property and equipment, net 23,609 22,614

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Current portion of lease obligations - Operating leases 5,492 5,360

Deferred revenue ($ 0 and $ 245 to a related party)

Deferred revenue 13,374 13,728

Total current liabilities 38,311 49,066

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100,000 shares authorized;

65,613 shares and 65,109 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

66,696 shares and 65,811 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 569,917 566,081

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(In Thousands, Except Per Share Amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Product revenue ($ 215 , $ 0 , $ 358 and $ 0 from a

related party)

$ 28,042 $ 28,731 $ 93,376 $ 53,674

Research and development revenue ($ 1,000 , $ 199 ,

$ 1,245 and $ 675 from a related party)

6,428 8,038 14,839 26,579

Three Months Ended March 31,

Product revenue $ 8,364 $ 30,690

Research and development revenue ($ 0 and $ 245 from a related party)

Total revenues 12,982 35,340

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Selling, general and administrative 15,399 15,705

Restructuring charges 72 —

Total costs and operating expenses 36,647 43,726

Income (loss) from operations ( 10,636 ) 1,330 ( 21,631 ) ( 12,312 )

Loss from operations ( 23,665 ) ( 8,386 )

Interest income 1,089 42

Other income, net 216 983 150 920

Income (loss) before income taxes ( 9,984 ) 2,354 ( 20,863 ) ( 10,968 )

Other expense, net ( 25 ) ( 3 )

Loss before income taxes ( 22,601 ) ( 8,347 )

Provision for income taxes 16 9

Net income (loss) $ ( 9,992 ) $ 2,244 $ ( 20,988 ) $ ( 11,089 )

Net income (loss) per share, basic $ ( 0.15 ) $ 0.03 $ ( 0.32 ) $ ( 0.17 )

Net income (loss) per share, diluted $ ( 0.15 ) $ 0.03 $ ( 0.32 ) $ ( 0.17 )

Weighted average common stock shares used in computing net income (loss) per share, basic 65,426 64,628 65,271 64,452

Weighted average common stock shares used in computing net income (loss) per share, diluted 65,426 67,741 65,271 64,452

See accompanying notes to the unaudited condensed consolidated financial statements.

Codexis, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(In Thousands)

Common Stock Additional

Capital Accumulated Deficit Total Stockholders' Equity

Three Months Ended September 30, 2022 Shares Amount

Balance as of July 1, 2022

65,494 $ 6 $ 558,147 $ ( 398,694 ) $ 159,459

Exercise of stock options 77 — 180 — 180

Release of stock awards 47 — — — —

Employee stock-based compensation — — 4,516 — 4,516

Non-employee stock-based compensation — — 15 — 15

Taxes paid related to net share settlement of equity awards ( 5 ) — ( 47 ) — ( 47 )

Net loss $ ( 22,617 ) $ ( 8,356 )

Balance as of September 30, 2022

65,613 $ 6 $ 562,811 $ ( 408,686 ) $ 154,131

Common Stock Additional

Capital Accumulated Deficit Total Stockholders' Equity

Three Months Ended September 30, 2021 Shares Amount

Balance as of July 1, 2021

64,623 $ 6 $ 542,519 $ ( 379,752 ) $ 162,773

Exercise of stock options 210 — 1,022 — 1,022

Employee stock-based compensation — — 2,955 — 2,955

Non-employee stock-based compensation — — 61 — 61

Net income — — — 2,244 2,244

Balance as of September 30, 2021

64,833 $ 6 $ 546,557 $ ( 377,508 ) $ 169,055

Net loss per share, basic and diluted $ ( 0.34 ) $ ( 0.13 )

Weighted average common stock shares used in computing net loss per share, basic and diluted 65,931 65,096

See accompanying notes to the unaudited condensed consolidated financial statements.

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Capital Accumulated Deficit Total Stockholders' Equity

Nine Months Ended September 30, 2022 Shares Amount

Three Months Ended March 31, 2023 Shares Amount

Balance as of January 1, 2023

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Employee stock-based compensation — — 2,809 — 2,809

Non-employee stock-based compensation — — 133 — 133

Issuance of common stock, net of issuance costs of $ 390

328 — 1,150 — 1,150

Taxes paid related to net share settlement of equity awards ( 65 ) — ( 404 ) — ( 404 )

Net loss — — — ( 22,617 ) ( 22,617 )

Balance as of September 30, 2022

Balance as of March 31, 2023

66,696 $ 6 $ 569,917 $ ( 443,907 ) $ 126,016

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Capital Accumulated Deficit Total Stockholders' Equity

Nine Months Ended September 30, 2021 Shares Amount

Three Months Ended March 31, 2022 Shares Amount

Balance as of January 1, 2022

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Net loss — — — ( 8,356 ) ( 8,356 )

Balance as of September 30, 2021

Balance as of March 31, 2022

65,304 $ 6 $ 554,683 $ ( 396,054 ) $ 158,635

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(In Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities:

Net loss $ ( 22,617 ) $ ( 8,356 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation 1,466 1,215

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Stock-based compensation 2,809 3,838

Provision (recovery) for credit losses ( 307 ) —

Equity securities earned from research and development activities from a related party ( 1,245 ) ( 675 )

Unrealized gain on non-marketable securities ( 208 ) ( 1,033 )

Equity securities earned from research and development activities ($ 0 and ($ 245 ) from a related party)

( 50 ) ( 245 )

Other non-cash items ( 5 ) ( 7 )

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Deferred revenue ( 1,727 ) ( 1,023 )

Net cash provided by (used in) operating activities 6,367 ( 14,927 )

Net cash used in operating activities ( 9,212 ) ( 11,186 )

Investing activities:

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Proceeds from exercises of stock options 281 181

Costs incurred in connection with equity financing ( 42 ) ( 153 )

Proceeds from issuance of common stock in connection with public offering 1,540 —

Costs incurred in connection with issuance of common stock at public offering ( 65 ) ( 42 )

Taxes paid related to net share settlement of equity awards ( 404 ) ( 1,419 )

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Capital expenditures incurred but not yet paid $ 819 $ 789

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of September 30, 2022 and 2021 to the total of the same such amounts shown above in the unaudited condensed consolidated statements of cash flows:

September 30,

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of March 31, 2023 and 2022 to the total of the same such amounts shown above in the unaudited condensed consolidated statements of cash flows:

Cash and cash equivalents $ 102,831 $ 94,260

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and its subsidiaries on a consolidated basis.

We discover, develop and sell enzymes and other proteins that deliver value to our clients in a growing set of industries to commercialize an increasing number of novel enzymes, both as proprietary Codexis products and in partnership with our customers.

We report our financial results based on two reportable segments:

We are a leading enzyme engineering company leveraging our CodeEvolver ® technology platform to discover, develop, enhance, and commercialize novel, high performance enzymes and other classes of proteins.

We report our financial results based o n two r eportable segments:

Performance Enzymes and Novel Biotherapeutics.

Our Novel Biotherapeutics business includes a diverse pipeline of product candidates in clinical and preclinical development.

Our Performance Enzymes business consists primarily of two focus areas:

i) biocatalysts for the sustainable manufacturing of pharmaceuticals and ii) enzymes for life science applications, including genomic sequencing and nucleic acid synthesis.

The segment information aligns with how the chief operating decision maker (CODM), who is our Chief Executive Officer (CEO), reviews and manages the business.

Business Update Regarding COVID-19

We are subject to risks and uncertainties as a result of the current COVID-19 pandemic.

The COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the U.S.

economy and other economies worldwide.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and may not be accurately predicted, including the duration and severity of the pandemic, the prevalence of more contagious and or virulent variants, and the extent and severity of the impact on our customers, new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide.

However, we are dependent on our manufacturing and logistics partners and consequently, disruptions in operations of our partners and customers may affect our ability to supply enzymes to our customers.

Furthermore, our ability to provide future R&D services may continue to be impacted by any disruptions in operations of our customers with whom we collaborate.

We believe that these disruptions have had a minimal impact on revenue for the three and nine months ended September 30, 2022.

The extent to which the pandemic may impact our business operations and operating results will continue to remain highly dependent on future developments, which are uncertain and cannot be predicted with confidence.

Should these disruptions escalate in the future, they may negatively and materially impact our business, results of operations and financial condition.

Basis of Presentation and Summary of Significant Accounting Policies

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The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022 and 2021, are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2021 Annual Report on Form 10-K and are updated below as necessary.

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements for the three months ended March 31, 2023 and 2022, are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2022 Annual Report on Form 10-K and are updated below as necessary.

There have been no significant changes in our significant accounting policies or critical accounting estimates since December 31, 2022.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of September 30, 2022, results of our operations for the three and nine months ended September 30, 2022 and 2021, changes in stockholders' equity for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of March 31, 2023, results of our operations for the three months ended March 31, 2023 and 2022, changes in stockholders' equity for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022.

The interim results are not necessarily indicative of the results for any future interim period or for the entire year.

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Accounting Pronouncements

Recently adopted accounting pronouncements

In May 2021, FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, a consensus of the Emerging Issues Task Force .

The standard establishes a principles-based framework in accounting for modifications of freestanding equity-classified written call options on the basis of the economic substance of the underlying transaction.

The standard also requires increment al financial statement disclosures.

The standard affects entities that present earnings per share in accordance with the guidance in Topic 260, Earnings Per Share.

We adopted the standard on January 1, 2022 on a prospective basis.

The adoption of this standard had no impact on our Unaudited Condensed Consolidated Financial Statements and related disclosures.

In August 2020, FASB issued ASU No 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) No.

2020-06 August 2020 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , to reduce the complexity and to simplify the accounting for convertible debt instruments and convertible preferred stock, and the derivatives scope exception for contracts in an entity's own equity.

In addition, the guidance on calculating diluted earnings per share has been simplified and made more internally consistent.

We adopted the standard on January 1, 2022 on a modified retrospective basis.

The adoption of this standard had no impact on our Unaudited Condensed Consolidated Financial Statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) :

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions in which the reference LIBOR or another reference rate are expected to be discontinued as a result of the Reference Rate Reform.

We adopted the standard on January 1, 2022 on a prospective basis.

The adoption of this standard had no significant impact on our Unaudited Condensed Consolidated Financial Statements and related disclosures.

Recently issued accounting pronouncements not yet adopted

There have been no other recent accounting pronouncements or changes in accounting pronouncements during the three and nine months ended September 30, 2022, that are of significance or potential significance to us.

Recently adopted accounting pronouncements or recently issued accounting pronouncements not yet adopted

There were no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023, that are of significance or potential significance to us.

Revenue Recognition

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Segment information is as follows (in thousands):

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

Major products and service:

Product revenue $ 28,042 $ — $ 28,042 $ 28,731 $ — $ 28,731

Research and development revenue 3,104 3,324 6,428 3,853 4,185 8,038

Total revenues $ 31,146 $ 3,324 $ 34,470 $ 32,584 $ 4,185 $ 36,769

Primary geographical markets:

Americas $ 3,654 $ 1,168 $ 4,822 $ 5,999 $ 1,817 $ 7,816

EMEA 3,831 2,156 5,987 2,317 2,368 4,685

APAC 23,661 — 23,661 24,268 — 24,268

Total revenues $ 31,146 $ 3,324 $ 34,470 $ 32,584 $ 4,185 $ 36,769

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

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The following table presents balances of contract assets, unbilled receivables, contract costs, and contract liabilities (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Contract assets $ 2,449 $ 2,116

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deferred revenue $ 28,882 $ 30,609

We had no asset impairment charges related to financial assets in the three and nine months ended September 30, 2022 and 2021.

We ha d no a sset impairment charges related to financial assets in the three months ended March 31, 2023 and 2022.

The increase in contract assets was primarily due to increases in product revenue from contracts subject to over time revenue recognition.

The decrease in unbilled receivables was primari ly due to the timing of billings.

T he increase in deferred revenue was primarily due to the receipt of the $ 25.9 million fee from Pfizer in August 2022, pursuant to the terms of the Enzyme Supply Agreement (the “Pfizer Supply Agreement” ) that was executed in July 2022 , which was partially offset by the recognition of $ 19.4 million in contract assets relating to the same performance obligation within the same agreement.

We recognized the following revenues (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

The increase in unbilled receivables was primarily due to the timing of billings.

The decrease in deferred revenue was primarily due to timing of recognition of revenue.

We recognized t he following revenues ( in thousands):

Three Months Ended March 31,

Revenue recognized in the period for:

2022 2021 2022 2021

Amounts included in contract liabilities at the beginning of the period:

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The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting periods.

The estimated revenue does not include contracts with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that are unexercised as of September 30, 2022.

The balances in the table below are partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts as of September 30, 2022 (in thousands):

Th e balances in the table below are partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts as of March 31, 2023 (in thousands):

Remainder of 2023

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Total revenues $ 13,371 $ 12,072 $ 100 $ 3,339 $ 28,882

N et Income (Loss) per S hare

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding, less restricted stock awards (“RSAs”) subject to forfeiture.

Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock shares outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities.

N et Loss per S hare

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding, less restricted stock awards ("RSAs") subject to forfeiture.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock shares outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities.

For all periods presented, diluted and basic net loss per share, are identical since potential common stock shares are excluded from the calculation, as their effect was anti-dilutive.

Anti-Dilutive Securities

In periods of net loss, the weighted average number of shares outstanding, prior to the application of the treasury stock method, excludes potentially dilutive securities from the computation of diluted net loss per common share because including such shares would have an anti-dilutive effect.

The following table sets forth the computation of basic and diluted net income (loss) per share during the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Net income (loss) $ ( 9,992 ) $ 2,244 $ ( 20,988 ) $ ( 11,089 )

Weighted average common stock shares used in computing net income (loss) per share, basic 65,426 64,628 65,271 64,452

Effect of dilutive shares — 3,113 — —

Weighted average common stock shares used in computing net income (loss) per share, diluted 65,426 67,741 65,271 64,452

Net income (loss) per share, basic $ ( 0.15 ) $ 0.03 $ ( 0.32 ) $ ( 0.17 )

Net income (loss) per share, diluted $ ( 0.15 ) $ 0.03 $ ( 0.32 ) $ ( 0.17 )

The following shares were not considered in the computation of diluted net income (loss) per share because their effect was anti-dilutive (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands):

Three Months Ended March 31,

Shares issuable under the Equity Incentive Plan 9,397 5,899

Investments in Non-Marketable Securities

Non-Marketable Debt Securities

We classify non-marketable debt securities, which are accounted for as available-for-sale, within Level 3 in the fair value hierarchy because we estimate the fair value based on a qualitative analysis using the most recent observable transaction price and other significant unobservable inputs including volatility, rights, and obligations of the securities we hold.

We determine gains or losses on the sale or extinguishment of non-marketable debt securities using a specific identification method.

Unrealized gains and losses from bifurcated embedded derivatives, which represent share-settled redemption features, are recorded as other expense, net, in the unaudited condensed consolidated statements of operations.

Unrealized gains and losses on non-marketable debt securities are recorded as a component of other comprehensive loss until realized.

Realized gains or losses are recorded as a component of other income, net.

In November 2020, we purchased convertible subordinated notes issued by Arzeda Corp.

(“Arzeda”), an early-stage computational protein design company, for $ 1.0 million and the investment was classified as available-for-sale non-marketable interest-bearing debt securities.

In July 2021, we converted the non-marketable debt security with a carrying value of $ 1.3 million into 207,070 shares of Series B-2 preferred stock of Arzeda Corp.

During the three and nine months ended September 30, 2021, we recognized nil and $ 0.3 million, respectively, in interest income from interest earned on our investment in this debt security.

There were no investments in non-marketable debt securities as of September 30, 2022 and December 31, 2021.

Non-Marketable Equity Securities

In March 2023, we purchased an additional 985,545 shares of Molecular Assemblies, Inc.

(“MAI”) Series B preferred stock for $ 0.8 million.

As of March 31, 2023, we hold an aggregate of 19,277,914 shares of MAI's Series A and B preferred stock that we have earned or purchased from MAI.

See Note 11 “Related Party Transactions” for additional information on our investment in MAI.

In March 2022, we entered into a Stock Purchase Agreement with seqWell, Inc.

(“seqWell”), a privately held biotechnology company, pursuant to which we purchased 1,000,000 shares of seqWell's Series C preferred stock for $ 5.0 million.

Our non-marketable equity securities are investments in privately held companies without readily determinable market value.

In March 2023, we entered into a Master Collaboration Agreement and Research Agreement with seqWell (the “seqWell Agreement”), pursuant to which we are providing research and experimental screening and protein engineering activities in exchange for compensation in the form of additional shares of seqWell's common stock.

We received 47,933 shares of seqWell's common stock from research and development services with seqWell and we recognized $ 50 thousand in research and development revenue from these services with seqWell during the three months ended March 31, 2023.

We own 207,070 shares of Series B-2 preferred stock of Arzeda Corp.

(“Arzeda”), an early-stage computational protein design company.

Our non-marketable equity securities are investments in privately held companies without readily determinable market value and primarily relate to our investments in MAI, seqWell and Arzeda.

These investments are accounted for under the measurement alternative and are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar securities of the same issuer.

Non-marketable equity securities are measured at fair value on a non-recurring basis and classified within Level 2 in the fair value hierarchy because we estimate the fair value of these investments using the observable transaction price paid by third party investors for the same or similar security of the same issuers.

We adjust the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other income, net in the unaudited condensed consolidated statements of operations.

For the three months ended September 30, 2022, we recognized a $ 0.2 million unrealized gain in other income, net, and included as adjustment to the carrying value of our investment in MAI, for the remeasurement of the additional 1,587,049 shares of Series B preferred stock received as milestone payment during the three months ended September 30, 2022 based on the latest observed transaction price of MAI's preferred stock.

See Note 11 “Related Party Transactions” for additional information on our investment in MAI.

For the three months ended September 30, 2021, we recognized a $ 0.7 million unrealized gain in other income, net, due to an adjustment to the carrying value of our investment in MAI based on an analysis of observed transaction price from MAI's round of financing during the third quarter of 2021.

There wa s no re measurement event for our investments in MAI and in other non-marketable equity securities that occurred during the remainder of 2022 and 2021.

We recognized no realized gains or losses during the three and nine months ended September 30, 2022 and 2021.

We adjust the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other expense, net in the unaudited condensed consolidated statements of operations.

There was no remeasurement event for our investments in MAI, seqWell, Arzeda, and other non-marketable equity securities that occurred during the three months ended March 31, 2023 and 2022.

We recognized no realized gains or losses during the three months ended March 31, 2023 and 2022.

The following table presents the carrying value of our non-marketable equity securities (in thousands):

September 30, 2022 December 31, 2021

Molecular Assemblies, Inc.

March 31, 2023 December 31, 2022

$ 14,671 $ 13,921

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The following tables present the financial instruments that were measured at fair value on a recurring basis within the fair value hierarchy (in thousands):

September 30, 2022

March 31, 2023

Level 1 Level 2 Level 3 Total

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Money market funds $ 77,309 $ — $ — $ 77,309

During the three and nine months ended September 30, 2022 and 2021, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on non-marketable securities.

During the three months ended March 31, 2023 and 2022, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on non-marketable securities.

Balance Sheets Details

Cash Equivalents

Cash equivalents as of September 30, 2022 and December 31, 2021, consisted of the following (in thousands):

September 30, 2022 December 31, 2021

Cash equivalents consisted of the following (in thousands):

March 31, 2023 December 31, 2022

Adjusted Cost Estimated Fair Value Adjusted Cost Estimated Fair Value

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$ 100,165 $ 100,165 $ 77,309 $ 77,309

(1) Money market funds are classified in cash and cash equivalents on our unaudited consolidated balance sheets.

(1) Money market funds are classified in cash and cash equivalents on our unaudited condensed consolidated balance sheets.

Average contractual maturities (in days) is not applicable.

As of September 30, 2022, the total cash and cash equivalents balance of $ 108.7 million consisted of money market funds of $ 83.6 million and cash of $ 25.1 million held with major financial institutions.

As of March 31, 2023, the total cash and cash equivalents balance of $ 102.8 million consisted of money market funds of $ 100.2 million and cash of $ 2.6 million held with major financial institutions.

As of December 31, 2022, the total cash and cash equivalents balance of $ 114.0 million consisted of money market funds of $ 77.3 million and cash of $ 36.7 million held with major financial institutions.

Inventories consisted of the following (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Raw materials $ 108 $ 108

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Finished goods 1,852 1,830

Inventories $ 1,623 $ 1,160

Inventories are recorded net of reserves of $ 1.3 million and $ 1.4 million as of September 30, 2022 and December 31, 2021, respectively.

Total Inventories $ 1,996 $ 2,029

Inventories are recorded net of reserves o f $ 1.2 million a s of March 31, 2023 and December 31, 2022.

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Laboratory equipment $ 40,489 $ 39,679

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Depreciation expense included in both research and development expenses and selling, general and administrative expenses in the unaudited condensed consolidated statements of operations was as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Depreciation expense $ 1,466 $ 1,215

Goodwill had a carrying value of $ 3.2 million as of September 30, 2022 and December 31, 2021.

Goodwill had a carrying value of $ 3.2 million as of March 31, 2023 and December 31, 2022.

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

September 30, 2022 December 31, 2021

Accrued purchases $ 7,573 $ 6,755

March 31, 2023 December 31, 2022

Accrued professional and outside service fees $ 4,256 $ 3,495

Accrued purchases 2,896 10,852

Other 1,188 932

Total $ 12,992 $ 12,578

Total other accrued liabilities $ 8,340 $ 15,279

Stock-based Compensation

Equity Incentive Plans

In 2019, our board of directors (the "Board") and stockholders approved the 2019 Incentive Award Plan (the "2019 Plan").

In January 2023, our board of directors (the “Board”) approved the 2022 Employment Inducement Award Plan (the “2022 Inducement Plan”) which provides for the grant of non-qualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance awards, other stock awards and dividend equivalents to eligible employees with respect to an aggregate of up to 2,000,000 shares of our common stock.

In 2019, the Board and stockholders approved the 2019 Incentive Award Plan (the “2019 Plan”).

The 2019 Plan superseded and replaced in its entirety our 2010 Equity Incentive Plan (the “2010 Plan”) which was effective in March 2010, and no further awards will be granted under the 2010 Plan;

however, the terms and conditions of the 2010 Plan will continue to govern any outstanding awards thereunder.

The 2019 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), performance-contingent restricted stock units ("PSUs"), performance based options ("PBOs"), other stock or cash based awards and dividend equivalents to eligible employees and consultants of the Company or any parent or subsidiary, as well as members of the Board.

The 2019 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, RSA, RSUs, performance-contingent restricted stock units (“PSUs”), performance based options (“PBOs”), other stock or cash based awards and dividend equivalents to eligible employees and consultants of the Company or any parent or subsidiary, as well as members of the Board.

The number of shares of our common stock available for issuance under the 2019 Plan is equal to the sum of (i) 7,897,144 shares, and (ii) any shares subject to awards granted under the 2010 Plan that were outstanding as of April 22, 2019 and thereafter terminate, expire, lapse or are forfeited;

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Performance-contingent Restricted Stock Units ("PSUs") and Performance Based Options ("PBOs")

The compensation committee of the Board approved, solely in respect of non-executive employees, delegated to our Chief Executive Officer the authority to approve grants of PSUs.

The compensation committee of the Board approved, solely in respect of non-executive employees, delegated to our CEO the authority to approve grants of PSUs.

The compensation committee of the Board also approved grants of PBOs and PSUs to our executives.

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When the performance goals are deemed to be probable of achievement for these types of awards, recognition of stock-based compensation expense commences.

Once the number of shares eligible to vest is determined, those shares vest in two equal installments with 50 % vesting upon achievement and the remaining 50 % vesting on the first anniversary of achievement, in each case, subject to the recipient’s continued service through the applicable vesting date.

Once the number of shares eligible to vest is determined, those shares vest in two equal installments with 50 % vesting upon achievement, as determined by the compensation committee of the Board, and the remaining 50 % vesting on the first anniversary of achievement, in each case, subject to the recipient’s continued service through the applicable vesting date.

If the performance goals are achieved at the threshold level, the number of shares eligible to vest in respect of the PSUs and PBOs would be equal to half the number of PSUs granted and one-quarter the number of shares underlying the PBOs granted.

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Achievement below the threshold level would result in no shares being eligible to vest in respect of the PSUs and PBOs.

In the first quarter of 2022, we awarded PSUs ("2022 PSUs") and PBOs ("2022 PBOs"), each of which commence vesting based upon the achievement of various weighted performance goals, including total revenues, research and development revenue, product revenue (excluding sales of CDX-616 to Pfizer for its use in the manufacture of a critical intermediate for nirmatrelvir, an active pharmaceutical ingredient (API) in its PAXLOVID™ product), operating expenses excluding cost of product revenue, strategic performance enzyme deliverables, strategic biotherapeutics deliverables, organization and infrastructure upgrades, corporate developments, and significant events that can be publicly announced, subject to the recipient's continued service.

As of September 30, 2022, we estimated that the 2022 PSUs and 2022 PBOs performance goals would be achieved at 97 % and 49 % o f the target level, respectively, and recognized stock-based compensation expenses accordingly.

In 2021, we awarded PSUs ("2021 PSUs") and PBOs ("2021 PBOs"), each of which commence vesting based upon the achievement of various weighted performance goals, including total revenues, product revenue, performance enzymes pipeline advancements, biotherapeutics pipeline advancements, organization and infrastructure upgrades, and significant events that can be publicly announced.

In the first quarter of 2022, we determined that the 2021 PSUs and 2021 PBOs performance goals had been achieved at 146 % and 73 % of the target level, respectively, and recognized stock-based compensation expenses accordingly.

No PSUs and PBOs were granted during the first quarter of 2023.

In 2022, we awarded PSUs ("2022 PSUs") and PBOs ("2022 PBOs"), each of which commence vesting based upon the achievement of various weighted performance go als, including finance and corporate strategy, performance enzymes and biotherapeutics deliverables, research plans, and organizational development.

In the first quarter of 2023, the compensation committee of the Board determined that the 2022 PSUs and 2022 PBOs performance goals had been achieved at 85 % and 42.5 % of the target level, respectively, and recognized stock-based compensation expenses accordingly.

Accordingly, 50 % of the shares underlying the 2022 PSUs and PBOs vested in the first quarter of 2023 and 50 % of the shares underlying the 2022 PSUs and PBOs will vest in the first quarter of 2024, in each case , subject to the recipient’s continued service on each vesting date.

In 2020, we awarded PSUs ("2020 PSUs") and PBOs ("2020 PBOs"), each of which commenced vesting based upon the achievement of various weighted performance goals, including total revenues, performance enzyme segment gross margin, major new biotherapeutics publicity events, strategic performance enzyme and biotherapeutics deliverables, and strategic plan development.

In 2021, we awarded PSUs ("2021 PSUs") and PBOs ("2021 PBOs"), each of which commence vesting based upon the determination by the compensation committee of the Board of the achievement of various weighted performance goals, including total revenues, product revenue, performance enzymes pipeline advancements, biotherapeutics pipeline advancements, organization and infrastructure upgrades, and significant events that can be publicly announced.

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Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Cost of product revenue $ 129 $ 100

Research and development 722 1,039

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The following table presents total stock-based compensation expense by security type included in the unaudited condensed consolidated statements of operations (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Stock options $ 922 $ 806

RSUs and RSAs 1,126 1,162

PSUs 965 640 2,279 1,683

PBOs ( 76 ) 998

Total $ 2,809 $ 3,838

In connection with the retirement of John Nicols, our former President and Chief Executive Officer, in August 2022, and the Transition and Separation Agreement between Mr.

Nicols and the Company effective as of July 26, 2022, certain supplementary modifications were made to Mr.

Nicols’ vested and unvested stock option and PBOs awards including voluntary forfeiture of certain unvested stock option and PBOs awards and the extension of the post-termination exercise period of certain vested stock option and PBOs awards.

During the three and nine months ended September 30, 2022 , we recorded a one-time, non-cash incremental compensation expense of $ 1.0 million, net of the required reversal of previously recognized stock-based compensation expenses attributed to unvested shares, in selling, general and administrative expenses related to these stock option award modifications.

As of September 30, 2022, unrecognized stock-based compensation expense, net of expected forfeitures, was $ 6.7 million related to unvested stock options, $ 7.5 million related to unvested RSUs and RSAs, $ 2.9 million related to unvested PSUs, and $ 1.7 million related to unvested PBOs based on current estimates of the level of achievement.

As of March 31, 2023, unr ecognized stock-based compensation expense, net of expected forfeitures, was $ 11.9 million related to unvested stock options, $ 8.6 million related to unvested RSUs and RSAs, $ 1.1 million related to unvested PSUs, and $ 0.2 million related to unvested PBOs based on current estimates of the level of achievement.

Stock-based compensation expense for these awards will be recognized through 2027.

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Exercise of Options

For the nine months ended September 30, 2022 and September 30, 2021, we issued 252,100 and 422,964 shares, respectively, upon option exercises at a weighted-average exercise price of $ 2.43 and $ 6.45 per share, respectively, with net cash proceeds of $ 0.6 million and $ 2.7 million, respectively.

For the three months ended March 31, 2023 and March 31, 2022, we issued 142,856 and 77,600 shares, respectively, upon option exercises at a weighted-average exercise price of $ 1.97 and $ 2.33 per share, respectively, with net cash proceeds of $ 0.3 million and $ 0.2 million, respectively.

Equity Distribution Agreement

We filed a shelf Registration Statement on Form S-3 with the SEC, under which we may sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings.

The registration statement became effective on May 7, 2021.

In May 2021, we filed a Registration Statement on Form S-3 with the SEC, that automatically became effective upon its filing, under which we may sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings.

On February 27, 2023, we filed a post-effective amendment to that Registration on Form S-3.

Pursuant to that post-effective amendment, we registered an aggregate $ 200.0 million of securities.

In May 2021, we entered into an Equity Distribution Agreement ("EDA") with Piper Sandler & Co ("PSC"), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of $ 50.0 million of shares of our common stock.

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With the exception of certain expenses, we will pay PSC up to 8 % of the gross sales price of the shares sold pursuant to the EDA for a combined amount of commission and reimbursement of PSC's expenses and fees.

During the three and nine months ended September 30, 2022, no shares of our common stock were issued pursuant to the EDA.

As of September 30, 2022, $ 50.0 million worth of shares remained available for sale under the EDA.

During the three months ended March 31, 2023, 327,480 shares of our common stock were issued pursuant to the EDA.

We received gross proceeds of $ 1.5 million, or $ 1.2 million in net proceeds after PSC's commissions and direct offering expenses of $ 0.4 million.

As of March 31, 2023, $ 48.5 million worth of shares remained available for sale under the EDA.

During the three months ended March 31, 2022, no shares of our common stock were issued pursuant to the EDA.

Commitments and Contingencies

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Pursuant to the terms of the RWC Lease, we exercised our right to deliver a letter of credit in lieu of a security deposit.

The letter of credit is collateralized by deposit balances held by the bank in the amount of $ 1.1 million as of September 30, 2022 and December 31, 2021, and are recorded as non-current restricted cash on the unaudited condensed consolidated balance sheets.

The letter of credit is collateralized by deposit balances held by the bank in the amount of $ 1.1 million a s of March 31, 2023 and December 31, 2022, and are recorded as non-current restricted cash on the unaudited condensed consolidated balance sheets.

In January 2021, we entered into a lease agreement with ARE-San Francisco No.

63, LLC ("ARE") to lease a portion of a facility consisted of approximately 36,593 rentable square feet in San Carlos, California to serve as additional office and research and development laboratory space (the "San Carlos Space").

The terms include an initial annualized base rent of $ 2.5 million, subject to scheduled 3 % annual rent increases, an annualized additional allowance payment of $ 0.4 million, plus certain operating expenses.

The lease has a 10 -year term from the lease commencement date of November 30, 2021 with one option to extend the term for an additional period of 5 years.

We have provided ARE with a $ 0.5 million security deposit in the form of a letter of credit and we commenced occupancy of the San Carlos Space in December 2021.

We have the right to sublease the facility, subject to landlord consent.

We have provided ARE with a $ 0.5 million security deposit in the form of a letter of credit and is recorded as non-current restricted cash on the consolidated balance sheets.

We are required to restore certain areas of the Redwood City and San Carlos facilities that we are renting to their original form.

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We review the estimated obligation each reporting period and make adjustments if our estimates change.

We recorded asset retirement obligations of $ 0.5 million an d $ 0.4 million as of September 30, 2022 and December 31, 2021, respectively, which are included in other liabilities on the unaudited condensed consolidated balance sheets.

Accretion expense related to our asset retirement obligations was nominal in the three and nine months ended September 30, 2022 and 2021.

We recorded asset retirement obligations of $ 0.5 million as of March 31, 2023 and December 31, 2022, which are included in other liabilities on the unaudited condensed consolidated balance sheets.

Accretion expense related to our asset retirement obligations was nominal in the three months ended March 31, 2023 and 2022.

Lease and other information

Lease costs, amounts included in measurement of lease obligations and other information related to non-cancellable operating leases and finance leases were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Finance lease costs $ — $ 18

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Weighted-average discount rate 5.4 %

Nine Months Ended September 30,

Three Months Ended March 31,

Cash paid (in thousands) :

Operating cash flows from operating leases $ 1,882 $ 1,022

As of September 30, 2022, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

As of March 31, 2023, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

Years Ending December 31, Operating Leases

2023 (remaining 9 months) $ 5,686

2027 and thereafter 20,706

Thereafter 14,871

Total minimum lease payments 50,411

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Payments Due by Period

Total 2022 (Remaining 3 Months) 2023 2024 2025 and Thereafter

Total 2023 (Remaining 9 Months) 2024 and

Development and manufacturing services agreements $ 3,734 $ 2,543 $ 1,191

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The right to take draws on the Term Debt expired on December 31, 2022.

On October 1, 2024, loans drawn, if any, under the Revolving Line of Credit terminate.

Advances made under the Revolving Line of Credit bear interest at a variable annual rate equal to the greater of (i) 4.25 % or (ii) the sum of (A) the prime rate plus (B) 1.00 %.

As of September 30, 2022 and December 31, 2021, we have not drawn from the Credit Facility.

Our obligations under the Credit Facility are secured by a lien on substantially all of our personal property other than our intellectual property.

The Credit Facility includes a number of customary covenants and restrictive financial covenants including meeting minimum product revenue levels and maintaining certain minimum cash levels with the lender.

The Credit Facility's financial covenants restrict the ability of the Company to transfer collateral, incur additional indebtedness, engage in mergers or acquisitions, pay dividends or make other distributions, make investments, create liens, sell assets, or sell certain assets held at foreign subsidiaries.

A failure to comply with these covenants could permit the lender to exercise remedies against us and the collateral securing the Credit Facility, including foreclosure of our properties securing the Credit Facilities and our cash.

As of September 30, 2022 and December 31, 2021, we were in compliance with the covenants for the Credit Facility.

We terminated the loan agreement with Western Alliance Bank in March 2023.

Legal Proceedings

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Gain contingencies are not recorded until they are realized.

In April 2022, we reached a settlement resolving a non-material dispute involving the Company's trademark.

The terms of the settlement are not material to the business or the results of operations of the Company.

We are currently not a party to any material pending litigation of other material proceedings.

Indemnifications

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In June 2020, we entered into a Stock Purchase Agreement with MAI pursuant to which we purchased 1,587,050 shares of MAI's Series A preferred stock for $ 1.0 million.

In connection with the transaction, Mr.

Nicols, our former President and Chief Executive Officer, also joined MAI’s board of directors.

Concurrently with our initial equity investment, we entered into a Master Collaboration and Research Agreement with MAI (the “MAI Agreement”), pursuant to which we are leveraging our CodeEvolver ® protein engineering platform technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis.

Under the MAI Agreement, we are performing services utilizing our CodeEvolver ® protein engineering platform technology to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A and B preferred stock which are valued based on the observed transaction price of similar securities of MAI issued to third parties .

Nicols, our former President and CEO until August 2022, also joined MAI’s board of directors in June 2020.

Concurrently with our initial equity investment, we entered into a Master Collaboration and Research Agreement with MAI (the “MAI Agreement”), pursuant to which performed services utilizing our CodeEvolver ® protein engineering platform technology to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A and B preferred stock which are valued based on the observed transaction price of similar securities that MAI issued to third parties.

We completed the R&D service with MAI pursuant to the MAI Agreement during the first quarter of 2022.

In December 2021, we received the primary milestone payment pursuant to the MAI Agreement of $ 1.0 million in the form of an additional 1,587,049 shares of Series B preferred stock.

Upon execution of the Commercial License and Enzyme Supply Agreement with MAI (“MAI Supply Agreement”) in July 2022, we received the commercialization and enzyme supply agreement milestone payment pursuant to the MAI Agreement of $ 1.0 million in the form of an additional 1,587,049 shares of Series B preferred stock.

In addition to our initial equity investment and the shares we have received under the MAI Agreement, in April 2021, we purchased an additional 1,000,000 shares of MAI's Series A preferred stock for $ 0.6 million and in September 2021, we purchased 9,198,423 shares of MAI's Series B preferred stock for $ 7.0 million.

We recognized $ 1.0 million and $ 1.2 million in research and development revenue from transactions with MAI in the three and nine months ended September 30, 2022, respectively, and we recognized $ 0.2 million and $ 0.7 million in research and development service transactions with MAI in the three and nine months ended September 30, 2021, respectively.

Payment for the R&D services rendered under the MAI Agreement was received in the form of additional shares of MAI's Series A and Series B preferred stock.

We received an aggregate of 1,587,049 shares of MAI's Series A and B preferred stock in the three and nine months ended September 30, 2022 and we received an aggregate of 476,114 and an aggregate of 1,904,456 shares of MAI's Series A and B preferred stock in the three and nine months ended September 30, 2021, respectively.

As of September 30, 2022 we hold an aggregate of 18,292,369 shares of MAI's Series A and B preferred stock that we have earned or purchased since executing the Stock Purchase Agreement with MAI.

In April 2022, we received a purchase order from MAI for the delivery of certain enzyme products to MAI in 2022.

In July 2022, we and MAI executed the MAI Supply Agreement that will enable MAI to utilize an evolved terminal deoxynucleotidyl transferase (TdT) enzyme in MAI’s Fully Enzymatic Synthesis™ (or FES™) technology.

We recognized $ 0.2 million and $ 0.4 million in product revenue in the three and nine months ended September 30, 2022, respectively.

The carrying value of our investment in MAI Series A and B preferred stock was $ 13.9 million and $ 12.7 million as of September 30, 2022 and December 31, 2021, respectively (s ee Note 6 “Fair Value Measurements”) .

We had nil and $ 0.2 million in deferred revenue from MAI as of September 30, 2022 and December 31, 2021 respectively.

Revenues recognized from transactions with MAI in the three months ended March 31, 2023, and subsequent to the related party period which ended in August 2022, are included in the condensed consolidated statement of operations.

We recognize d $ 0.2 million in research and development revenue from transactions with MAI in the three months ended March 31, 2022 and during the related party period .

Segment, Geographical and Other Revenue Information

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Performance Enzymes and Novel Biotherapeutics.

Our chief operating decision maker ("CODM") is our Chief Executive Officer.

Our business segments are primarily based on our organizational structure and our operating results as used by our CODM in assessing performance and allocating resources for the Company.

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This provides the CODM with more meaningful segment profitability reporting to support operating decisions and allocate resources.

The following table provides financial information by our reportable business segments along with a reconciliation to consolidated income (loss) before income taxes (in thousands):

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

Product revenue $ 28,042 $ — $ 28,042 $ 28,731 $ — $ 28,731

Research and development revenue 3,104 3,324 6,428 3,853 4,185 8,038

Total revenues 31,146 3,324 34,470 32,584 4,185 36,769

Costs and operating expenses:

Cost of product revenue 9,786 — 9,786 6,867 — 6,867

Research and development (1)

6,782 13,855 20,637 5,670 8,850 14,520

Selling, general and administrative (1)

3,791 888 4,679 3,306 831 4,137

Total segment costs and operating expenses 20,359 14,743 35,102 15,843 9,681 25,524

Income (loss) from operations $ 10,787 $ ( 11,419 ) ( 632 ) $ 16,741 $ ( 5,496 ) 11,245

Corporate costs (2)

( 7,947 ) ( 8,097 )

Unallocated depreciation and amortization ( 1,405 ) ( 794 )

Income (loss) before income taxes $ ( 9,984 ) $ 2,354

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

The following table provides financial information by our reportable business segments along with a reconciliation to consolidated loss before income taxes (in thousands):

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

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2,798 951 3,749 3,541 720 4,261

Restructuring charges — 72 72 — — —

Total segment costs and operating expenses 15,418 8,335 23,753 18,184 13,066 31,250

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(1) Research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases.

(2) Corporate costs include unallocated selling, general and administrative expenses, interest income, and other income, net.

The following table provides stock-based compensation expense in cluded in income (loss) from operations (in thousands):

Three Months Ended September 30,

Performance Enzymes Novel Biotherapeutics Corporate cost Total Performance Enzymes Novel Biotherapeutics Corporate cost Total

Stock-based compensation $ 1,382 $ 414 $ 2,735 $ 4,531 $ 1,228 $ 272 $ 1,516 $ 3,016

Nine Months Ended September 30,

(2) Corporate costs include unallocated selling, general and administrative expenses, interest income, and other expense, net.

The following table provides stock-based compensation expense included in income (loss) from operations (in thousands):

Three Months Ended March 31,

Performance Enzymes Novel Biotherapeutics Corporate cost Total Performance Enzymes Novel Biotherapeutics Corporate cost Total

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Percentage of Total Revenues for the

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Customer A * 61 %

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Customer C 14 % *

Customer D 13 % *

Customer E 10 % *

* Percentage was less than 10%

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Percentage of Accounts Receivables as of

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Customer A * 53 %

Customer B 21 % *

Customer D 14 % *

Customer C 11 % 10 %

Customer F 14 % *

Customer G 12 % *

* Percentage was less than 10%

Geographical Information

Geographic revenues are identified by the location of the customer and consist of the following (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Americas $ 2,584 $ 3,732

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Identifiable long-lived assets by location was as follows (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

United States $ 61,622 $ 61,877

Identifiable goodwill by reporting unit was as follows (in thousands):

As of September 30, 2022 and December 31, 2021

As of March 31, 2023 and December 31, 2022

Performance Enzymes Novel Biotherapeutics Total

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The following table summarizes the financial assets allowance for credit losses (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Balance at beginning of period $ 163 $ 416

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The following tables summarize accounts receivable by aging category (in thousands):

September 30, 2022

March 31, 2023

Current 31-60 Days 61-90 Days 91 Days and over Total over 31 Days Total balance

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Accounts receivable $ 28,896 $ 1,747 $ 469 $ 792 $ 3,008 $ 31,904

Restructuring Charges

In November 2022, we announced a plan for a workforce reduction of approximat ely 18 % of our total employee to realign and optimize our workforce requirements in alignment with our refined corporate strategy.

The plan was substantially completed in December 2022 and severance costs were paid through the first quarter of 2023.

During the three months ended March 31, 2023, we recorded an additional restructuring charge of $ 0.1 million related to severance, bonus and other termination benefits in connection with the workforce reduction, which is expected to be paid in the second quarter of 2023.

We do not expect to record any significant future charges related to the restructuring plan initiated in 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements